Bump-up CD

Bump-up CD

A certificate of deposit granting the owner the right to increase its yield one time for the remaining term of the CD. The power is exercised by the owner in the event of an interest rate hike.

Bump-Up CD

A certificate of deposit in which the holder has the right to increase the interest rate paid on it if prevailing interest rates increase at some point over the term of the CD. The holder may only do this once; if interest rates decline, the new, higher rate on the CD remains the same. A bump-up CD protects the investor from some of the interest rate risk inherent to normal CDs.
References in periodicals archive ?
The highest-yielding two-year bump-up CD in the survey paid 0.
Bump-up CDs give investors the option to increase their rate at some point during the term should interest rates rise.
However, the yields offered on the bump-up CDs in the survey fell short of the top-yielding nationally available traditional CDs of the same maturity, often by a wide enough margin that there is no hope of 'bumping up' to a high enough yield to offset the lower initial yield.
Several other credit unions were highlighted in the bump-up CD category.
They tend to fall into three categories: step-up CDs, which rise at predetermined intervals during the course of the CD's term; liquid CDs, which allow investors to transfer money out of a CD to be reinvested in higher-rate CDs; and bump-up CDs, where holders can raise their rates a certain number of times during the CD's term.